BMO Capital reduced its price objective on Cognizant Technology Solutions (CTSH) to $83.00 from $96.00 and left its stock rating at Market Perform. The firm made the move while noting recent weakness in the shares, which have fallen 14.6% year-to-date and 18.2% over the past year.
In explaining the adjustment, BMO pointed to what it describes as an uncertain valuation backdrop for IT services companies amid the ongoing impacts of artificial intelligence across the broader technology sector. The research team highlighted valuation measures that it sees as constraining multiple expansion: Cognizant is trading at a price-to-earnings ratio of 15.6 and carries a notably elevated PEG ratio of 13.7, metrics the firm says support a cautious outlook on further valuation upside.
"Positively biased," said the firm of its view on Cognizant, while also noting a reduced conviction in the potential for multiple expansion in a dynamic tech landscape. BMO characterized the note as a "placeholder" while it continues to refine its view on the company.
Despite the downgrade to its target, BMO expressed confidence that Cognizant can deliver on its CY26 guidance and left open the possibility of modest upside should execution prove stronger than the market expects.
Recent company performance and commercial developments
Cognizant reported fourth-quarter 2025 results that beat the consensus EPS estimate, delivering earnings per share of $1.35 versus an anticipated $1.32. Revenue for the quarter came in at $5.3 billion, a slight miss compared with the expected $5.31 billion.
The company also disclosed a new three-year agreement with DAMAC Group of the UAE to manage and enhance DAMAC’s IT infrastructure and application services. The engagement is intended to streamline DAMAC’s operations across areas such as property development and logistics.
Other analyst activity
Separately, Jefferies trimmed its price target for Cognizant to $90 from $100 while maintaining a Buy rating. The firm cited concerns related to artificial intelligence but nevertheless raised its 2026 adjusted EPS estimate for Cognizant to $5.72.
Implications for the market
BMO’s move underscores how AI-driven market dynamics are influencing analyst views on IT services valuations. The firm’s emphasis on conventional valuation ratios alongside AI-related uncertainty reflects a tension between fundamental earnings trajectories and the scope for re-rating across the technology and IT services sectors.
For investors, the combination of an EPS beat and a revenue slight miss, ongoing client wins such as the DAMAC agreement, and divergent analyst target adjustments illustrate the mixed signals currently shaping sentiment toward Cognizant.